Starting up your own business is fine, however have you been thinking about this, if so, what business and how much do you know about it?
If you don't, and it is just the idea of going into business, it is better to wait at the moment and either do further education or get a job and earn some more do$h.
Look at doing some after hours hobby that makes money, so that you get a good idea of how business works, are you from a family who has people who are self employed, and you know how it works being in Business?
Investment is the best option, you should get it wrapped up in an ISA, this stops you getting clobbered for Capital Gains Tax (CGT) ￡7,000 is well inside the ￡11,520 allowance, but don't just look at one company, go for about 5 or 6 to spread the risk, Companies can go bust, unlikely with a FTSE 100, and FTSE 250 a bit more risky but you will be very unlucky to pick a real lemon if you stick to those two listings.
Look at the FTSE 100 and FTSE 250, stick to Businesses you understand, and companies who invest heavily in R & D and are paying a regular dividend, and here is the real trick.
Get your dividend paid in more shares.
The point about shares is gaining compound interest, don't take your dividend in cash, get it in more Shares this way the number of shares grows and you don't spend more money and you don't spend the dividend payout, it is there for future years, but also because you are being paid in more shares, that increases the % amount of interest over what you paid for your shares in the first place.
Lets say the share is ￡20 each you buy 50 that is ￡1,000 and the dividend pay out is 5% at the end of the year you will be paid 2.5 shares, so you now have 52.5 shares, so the next year you get 2.625 shares and have 55 shares, but if you have bought the correct shares that are performing well, they will now be selling for ￡22.05, so your 50 shares are worth ￡1102.5, oh and if they are paying 5% then you will actually get 2.68 shares not 2.625 and it goes on.
Initially compound interest doesn't appear to do that much, but 10% growth doubles your money in 7 years, and quadruples your money in 14 years.
In seven years a decent share will be worth double, and the dividend likewise, but also the number of shares will have risen because you have been paid in shares so your holding will be a lot more than double, and the prices may well be more than double, so your worth might have quadrupled within the 7 years.
A fourfold increase in value is not exceptional, another share might have decreased by 90%. But at ￡2,000 say for 2 different companies where one performs well say 4 fold increase, and the other down 90% you are then worth ￡4,100 still not bad?
The best example was a friend of my Mums, she was in shock when her husband's will was read out and she found that some shares her husband had bought in the 1960s had matured, he paid between ￡250 and ￡500 we aren't sure how much, in a small Leeds company called Associated Dairies, he had never taken the dividend, and they were worth in 2001 about ￡600,000 (or close to $1 million) you know the company as Asda.
You can always look at going into business once you have a good idea, look at good margins, and being Efficient, Efficiency pays wages, and makes profits.
And so does better service than the next company.
Good luck.
Hello Kirsty , Alan here
I see your dilemma but i am somehow torn as to whether you are making a well informed decision. I am sure your family are already proud of you. If you want to invest in something, invest in your future put it towards going to college ( or as the case may be go back to school) If you really want to make them proud go back and earn a college degree and better yourself through education. Let me tell you trading is not for everyone and money can be made but it call also be LOST just as quick due to the financial crisis everything is toning down. So my advice is invest in yourself maybe upgrade the college you are going to. Then with the money left over put it in to a bank account and let it mellow and earn interest. I send my apologies to hear about your father.I am truly wishing you the best. And if you really want business ideas or want to share and exchange ideas send me an e-mail. : AlanCosgrove1200@Hotmail.com.
Have a great day Kirsty i hope to hear from you and your ventures at your earliest convenience.
Alan
Here's some advice from the US. Many years ago, my dad told me to buy good stocks and hold on to them. I followed his advice. It worked extremely well.
You should invest in large companies that have been around for a long time, "defensive" stocks, like food companies, consumer products companies, public utilities, pharmaceutical companies. These are things that everyone needs every day.
These have a much lower risk than cyclical companies that make, for example, farm equipment, mining equipment, computers, software, etc. And they will be worth a lot more in 10-20-30 years than they're worth today.
Don't start up your own business until you have worked in one or two for several years and have learned all there is to know about them.(the marketplace, the products or services you are selling, the financial issues, employee relations, etc) It's a lot of work and very high risk. Many businesses fail, even with experienced owners running them.
I wish you the best.
Ehm..
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Bye
In the market, there are many options to stabilize new business with your budget. You can also save some money for emergency purposes. For preventing to business lose, you 1'st know about this business like cost of business, planning to start it, value of the profit, feature of business, Row material source etc. So there are very import points to the success of any business.
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So long story short, I was left around ￡7,000 for my 18 birthday. It was left because of the loss of my dad, and I really want to do something with it that would make him and my family proud. I also don't want to just spend it and have nothing to show for it.
So I want to invest or possibly start up my own business. I know how hard and costly it is and realistically ￡7,000 could disappear quickly. So obviously I'm looking for a small business idea or investment idea.
